Using information from 126 whistleblower reports, anti-corruption nonprofit organisation Corruption Watch's 'Covid-19 TERS Corruption at Work' report reveals that mismanagement and corruption is preventing Temporary Employer/Employee Relief Scheme (TERS) benefits from reaching all eligible employees.

The most common type of allegation was of employers receiving the TERS but failing to pay it over to the employees, followed by employers claiming a TERS benefit for employees who were working. Other examples included partial TERS payments rather than the full amount due to employees, false claims or failure to claim the TERS for those employees who were not working and therefore eligible, Corruption Watch head of legal and investigations Karam Singh said at a media briefing to launch the report on February 1.

"Although the TERS fund has benefited many people since its introduction in March 2020, its administration has not been without complications. This has had a detrimental effect on targeted beneficiaries of the TERS, who were not supported as a result of mismanagement and, in some cases, outright corruption. These reports, therefore, still give cause for concern and expose the gaps in the operations of the Unemployment Insurance Fund (UIF) that need to be addressed," he added.

Whistleblowers were employed in the private security services, food and beverage services, fuel sales (petrol stations), transport and logistics and construction sectors, besides others. The allegedly implicated parties included payroll officers, company finance personnel and managers, inspectors who took bribes to ignore labour rights breaches and third parties who offered support to access benefits.

"By far the most reports (88%) that we received were from employees. In most cases, their income had dried up or been drastically reduced and they were desperately trying to follow up about when their TERS claims would be paid out."

Many employees (77 out of 126 reports) alleged that their employers had pocketed the TERS money instead of paying it over to them. A number of employees checked the Department of Employment and Labour’s (DEL's) website and, determining that the money had been paid out, confronted their employers about it. In seven such cases, the employer said they had paid the money back to the DEL.

In nine instances, the employer paid employees less TERS than received from the DEL. Several employers claimed TERS for employees who were actually working and some claimed for employees who had left their employ and who then could not access UIF benefits.

“The Covid-19 pandemic has exposed the fault lines in our society, along with the weaknesses in how funds and benefits are administered, and whether they reach the intended beneficiaries. We hope to highlight measures that could be put in place to strengthen the operations of the UIF going forward," he said.

In many instances, administrative justice was the crux of the matter. There were delays in the time from application to receiving the TERS benefit. This meant that when the employee was in crisis, the benefit was not available to them and they reported a sense of urgency arising from being unable to pay expenses such as rent, food, airtime and transport.

"In numerous instances, there were significant delays on the part of the DoL. How a department interfaces with citizens can result in a person’s dignity being enhanced or the person is left increasingly frustrated because officials neglect to ensure they carry out their duties efficiently," noted Singh.

The more common complaint that related to officials was a frustration at failures to ensure matters were dealt with in a timely manner. It was evident that processes and systems that were put in place were insufficient, given the scale of the task.

Further, the element of corruption was heightened by administration characterised by delays between the application and actual receipt of the TERS benefit, which meant that when the employee was in crisis, the benefit was not forthcoming. The sense of urgency arising out of the inability of employees to pay their expenses was therefore not taken into account, said Singh.

CORRUPTION
"In the TERS reports we received. which contained allegations of corruption, it is evident once more that both the public and private sectors are involved in corruption. In most cases, the allegation was that the employer (private sector) had been the initiator of the corrupt act, for example, bribing an official (public sector)."

Corruption Watch investigated reports where there was sufficient evidence of criminal wrongdoing to enable further action. In selected cases, there were allegations of employers bribing officials.

"In several reports, there were allegations of false TERS claims for employees who had long since left the company, claims made for identity numbers of persons not even working for the company and for employees who were in fact working during lockdown.

"The cases that Corruption Watch investigated further were clearly not mere administrative errors, rather they were deliberate acts amounting to fraud and misappropriation of resources. There were also several allegations of employers failing to pay UIF deducted from employees to DoL, as well as their failure to pay employees tax payable to South African Revenue Service (Sars); this is illegal and amounts to tax evasion," highlighted Singh.

These reports are being referred to the Special Investigating Unit (SIU) for the Fusion Centre to investigate.

"It is a matter of concern for Corruption Watch that maladministration has clearly become an entrenched culture. To ensure that gaps in delivery of benefits of this nature are addressed in the future, the organisation proposes several recommendations. These relate to improvements in law enforcement, in the use of technology around responsiveness, better processes, and enhanced controls," said Singh.

To strengthen law enforcement, Corruption Watch recommended that the SIU Fusion Centre look into practices of employers who are not paying over employees’ UIF contributions and engaging in other forms of tax evasion.

Further, it suggested that the SIU Fusion Centre investigate cases of bribery of inspectors and DEL officials by employers, as it undermines labour rights. It also noted that law enforcement should continue to recover TERS amounts paid erroneously or owing to misrepresentation.

The nonprofit also recommended the use of technology to improve responsiveness.

"Improve the integration of information technology systems at the DEL and across different government departments. The DEL must ensure that there are an adequate number of officials employed in parts of the system where bottlenecks occur and that officials are equipped with skills for a changing information and communication technology paradigm.

Additionally, to improve processes, the DEL must ensure that technological interfaces for UIF administration and claims are user-friendly, and must improve responsiveness to ensure that UIF claims are processed timeously, Corruption Watch stated.

"Performance targets related to acceptable turnaround times must be included in officials’ performance agreements. If a claim is not successful, the DEL must ensure that there are clear mechanisms for the claimant to appeal the outcome," said Singh.

To improve controls, the Department of Home Affairs must set a timeframe within which to eradicate duplicate identity documents, while the DEL must put safeguards and preventative controls in place to ensure that, going forward, UIF claims are assessed more rigorously in order to prevent corruption before it happens.

"The value of this retrospective view of how the TERS was distributed in unusual circumstances is that it documents the human impact of its failures and highlights how processes can be subverted, and who is to blame.

“Our aim is to ensure that those most vulnerable during periods of economic stringency have some recourse through existing funds and institutions to seek relief,” he stated.